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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Groups: group relief: example - surrender of excess capital allowances

Company H is a 100% per cent subsidiary of Company C.  Both companies prepare their accounts to 31 December.  The accounts and computations of the companies for the 12 months to 31 December 2011 show the following.

Company C  
Trading profits £3,000
Income from special leasing £1,000
Capital allowances in respect of special leasing £1,500
Company H  
Trading profits £1,000

Company H claims relief , with the consent of Company C, in respect of the excess capital allowances (CTM80120) of £500 of Company C.  Note that Company C can surrender all its excess capital allowances, notwithstanding it has other profits for the accounting period.

The CT computations for the accounting period to 31 December 2011 are as follows.

Company C  
Trading income £3,000
Special leasing income  (Income £1,000 less CAs £1,000) Nil       
CT profits £3,000
Company H  
Trading income £1,000
Group relief claimed (CTA10/S101) (£500)
CT Profits £500  

Company C has no balance of capital allowances available to carry forward as follows.

Capital allowances in respect of special leasing   £1,500
Used in computation (£1,000)  
Surrendered as group relief (£500) (£1,500)
Available to carry forward   Nil